Barratt and Taylor Wimpey investigated over fears thousands of homeowners were mis-sold leasehold properties

FOUR of the UK’s biggest house builders are being investigated over fears thousands of homeowners were mis-sold leasehold properties. The Competition and Markets Authority (CMA) has threatened to take Barratt Developments, Countryside Properties, Persimmon Homes and Taylor Wimpey to court unless they change the way they do business. It comes after the watchdog found “troubling” […]

FOUR of the UK’s biggest house builders are being investigated over fears thousands of homeowners were mis-sold leasehold properties.

The Competition and Markets Authority (CMA) has threatened to take Barratt Developments, Countryside Properties, Persimmon Homes and Taylor Wimpey to court unless they change the way they do business.

Credit: AidanStock / Alamy Stock Photo

Four of the UK’s biggest house builders are being investigated over fears thousands of homeowners were mis-sold leasehold properties[/caption]

It comes after the watchdog found “troubling” evidence in an investigation that they’d mistreated leasehold buyers.

The regulator said that buyers may have been misled by developers, and been trapped into leaseholds with ground rents that double every decade.

CMA found that developers had not clearly explained what ground rent is and whether it increases over time to some buyers.

Some people were also told properties on an estate would only be sold as leasehold homes, when they were in fact later sold as freeholds to other buyers.

Others were being misled about the cost of converting their leasehold to freehold ownership, with the cost increasing from a “small sum” to thousands of pounds with little to no warning.

Plus, the CMA said developers used unfair sales tactics such as unnecessary short deadline to complete purchases.

It meant some homebuyers may have felt pressured to buy a property that they may not have purchased had they been given more time.

The CMA told The Sun it expects “thousands” to be affected by some of the issues, while Housing Minister Heather Wheeler recently suggested it is between 12,000 and 100,000.

The Housing, Communities and Local Government Committee warned last year that leasehold homeowners were being ripped-off by developers, freeholders and management agents.

While The Sun told the story of one family tapped in a home they can’t sell as their ground rent doubles every 10 years up to a whopping £8,000.

According to the Government, around 4.3million homes – both flats and new builds – in England are leasehold.

This is where you own the property for a fixed period of time but you don’t own the building or the ground it sits on.

Because of this, the leaseholder typically pays an annual ground rent to the freeholder who owns the building.

The CMA has now written to Barratt, Countryside, Persimmon, and Taylor Wimpey with its concerns and required information.

Depending on the evidence the firms provide, they may be forced to give legal commitments to change the way they do business.

Alternatively, if necessary, the CMA could take the firms to court, it said.

Andrea Coscelli, chief executive of the CMA, said: “It is unacceptable for housing developers to mislead or take advantage of homebuyers.

“Everyone involved in selling leasehold homes should take note: if our investigation demonstrates that there has been mis-selling or unfair contract terms, these will not be tolerated.”

Mark Hayward, chief executive of NAEA Propertymark, said it’s “promising” that the CMA is taking action against the house builders.

It comes after a report by the estate agents body found that 62% of leasehold property owners felt they were mis-sold while a further 93 per cent said they wouldn’t buy another leasehold property.

Mr Hayward added: “This means that for too long house builders and developers have not been transparent enough about what it means to buy a leasehold property, leaving many in financial difficulty as they have become trapped in confusing contracts with their freeholder.”

Alongside today’s enforcement action, the CMA is also contacting other developers encouraging them to review their practices.

The CMA said it’ll aim to progress this stage of its investigation quickly, but couldn’t give a time frame.

It told The Sun it’ll consider whether it can get back compensation for leaseholders during the investigation, but added this depends on the the circumstances of the case and the extent of its powers.

The CMA has requested stronger powers from the government, including the ability to fine companies for breaking consumer protection law.

The government plans to ban the sale of new leasehold houses and reduce ground rents for new leases to zero.

However, the changes require legislation to come into force and it’s not yet clear when this might actually happen.

Following the announcement, a Countryside spokesperson said: “We are committed to resolving this issue to the satisfaction of our customers and will continue to co-operate fully with the CMA’s ongoing investigation.”

Barratt said: “The group is committed to putting its customers first and will continue to cooperate with the CMA whilst it completes its investigation.”

Taylor Wimpey said: “The board takes this very seriously and Taylor Wimpey will continue to fully cooperate with the CMA, provide the further information to be requested by the CMA in the coming weeks and work with them to better understand their position.”

While Persimmon said: “A proportion of our properties were sold on a leasehold basis in the past.

“Following consultation with government, stakeholders and customers we took the decision to stop selling leasehold houses where Persimmon owns the land freehold in 2017.

“Any customers of a Persimmon leasehold property in the last six years have been given the right to buy their lease at below market value and many have done so.

“We look forward to engaging fully with the CMA on this issue as they continue their investigation.”